This 2011 Amendment to 1990 Hydropower Contract, dated this ___ day of __________, 2011 is made between New York State Electric and & Gas Corporation ("Company") and the Power Authority of the State of New York ("Authority").

WHEREAS, New York State Electric and & Gas Corporation (“Company”)
and the New York Power Authority (“Authority”) are parties to an agreement
dated February 22, 1989 under which the Authority sells certain quantities of
hydroelectric power and energy from Authority’s Niagara and St, Lawrence
Projects to Company for resale to its rural and residential consumers (the “1990
Hydropower Contract”).

WHEREAS, Authority, Rochester Gas and Electric Corporation (“RGE”)
and Company are also parties to a letter agreement dated February 14, 2008 (“February
14, 2008 Letter Agreement”) which modified Article D - Regulation of Rates and
Charges as it pertained to the calculation of the monthly savings realized by
the customers of Company and RGE from the purchase of Authority hydropower.

WHEREAS, Company and Authority have previously modified and extended
the 1990 Hydropower Contract, most recently by the “2010 Amendment to 1990
Hydropower Contract” (the “2010 Amendment”).

WHEREAS, by letter dated June 29, 2011, Authority withdrew
all 167 MW of Firm Hydroelectric Power and Energy allocated under Service
Tariff No. 41 and terminated service under the 1990 Hydropower Contract with
respect to all 167 MW of Firm Hydroelectric Power and Energy, effective August
1, 2011, for use in the Recharge New York Power Program created pursuant to
Chapter 60 (Part CC) of the Laws of 2011 (the “Firm Power and Energy
Withdrawal/Termination”).

WHEREAS, Company and Authority agree to further modify and extend
certain terms of 1990 Hydropower Contract as follows:

1)As a result of the Authority’s Firm Power and Energy
Withdrawal/Termination, the amount of Firm Hydroelectric Power and Energy
allocated to Company under Service Tariff No. 41 is zero (0). The Firm Peaking
Power allocation of 150 MW under Service Tariff No. 42 will remain unchanged.

2)Article E - Rates. The current text is deleted in its entirety and is
replaced with the following text.

“The rates charged by the
Authority under this Agreement shall be established In accordance with this
Article.

The Authority shall charge and
Company shall pay the preference power rates adopted by the Authority on November
15, 2011, as such rates may be revised from time to time. Company waives any
and all objections, suits, appeals or other challenges to the preference power
rates adopted by the Authority on November 15, 2011, except as otherwise
provided for below.

Company waives any challenges to
any of the following methodologies and principles used by the Authority to set
future preference power rates, numbers (i) through (vii) as set forth in the “January
2003 Report on Hydroelectric Production Rates” as modified by the April 2003 “Staff
Analysis of Public Comments and Recommendations”:

In the event the Authority ceases
to employ any of the methodologies and principles enumerated above, the Company
shall have the right to take any position whatsoever with respect to such
methodology or principle, but shall not have the right to challenge any of the
remaining methodologies and principles that continue to be employed by the
Authority.”

3)Article F - Transmission. The current text is deleted in its entirety
and is replaced with the following text.

“In accordance with the terms of
the existing transmission service agreement, which by its terms will expire on
August 31, 2007, Company will cease taking transmission service from Authority
and will instead take transmission service under the New York Independent
System Operator's (“NYISO”) Open Access Transmission Tariff. Company agrees to
settle any outstanding transmission charges that may apply prior to September
1, 2007 including any subsequent NYISO true up settlements.”

4)Article G - Notification. In the contact address for Authority replace “10
Columbus Circle, New York, NY 10019” with 123 Main Street, White Plains, NY
10601”. For Company, delete the current reference in its entirety and replace
with the following “Dave Kimiecik, Vice President, Energy Supply, New York
State Electric & Gas Corporation, 18 Link Drive, P.O. Box 5224, Binghamton,
New York 13902-5224”.

5)Article K - Restoration of Withdrawn Power and/or Energy is deleted in
its entirety.

6)Article L - Term of Service, is revised to read as follows:

“Service under this contract shall
commence at 12:01 A.M. on January 1, 1990 and shall continue unless cancelled
as provided for In the "Withdrawals of Power and/or Energy" or the
"Cancellation or Reduction" provisions until __________, subject to earlier termination by the Authority with
respect to any or all of the quantities of power and energy provided hereunder
on at least thirty (30) days’ prior written notice to Company.”

7)Article M - Availability of Energy - Firm and Firm Peaking Hydroelectric
Power Service. In the third paragraph, line 1, starting with the words “In the
event that...” through “... minimize the impact of such reductions,” on line
10, replace with the following:

“The Authority will have the right
to reduce on a pro rata basis the amount of energy provided to Company under
Service Tariff No. 42 if such reductions are necessary due to low flow (i.e.
hydrologic) conditions at the Authority's Niagara Project hydroelectric
generating station. In the event that hydrologic conditions require the
Authority to reduce the amount of energy provided to Company, reductions as a
percentage of the otherwise required, energy deliveries will be the same for
all firm Niagara Project customers. The Authority shall be under no obligation
to deliver and will not deliver any such curtailed energy to Company in later
billing periods. The offer of Energy for delivery shall fulfill Authority's
obligations for purposes of this Provision whether or not the Energy is taken
by Company. The Authority shall provide reasonable notice to Company of any
condition or activities that could result, or have resulted, in low flow
conditions consistent with the notice provided to other similarly affected
customers.”

8)This amendment shall be referred to as the “2011 Amendment to the 1990
Hydropower Contract”.

9)Continuation of service under this 2011 Amendment to the 1990 Hydropower
Contract shall be subject to ultimate approval by the Governor of the State of
New York pursuant to Section 1009 of the Public Authorities Law. If the
Governor disapproves this 2011 Amendment to the 1990 Hydropower Contract,
service will cease on the last day of the month following the month during
which the Governor disapproved this 2011 Amendment to the 1990 Hydropower
Contract. If the Governor takes no action within the time frame provided for
in Section 1009, service will cease on the last day of the month following the
month during which such timeframe expired.

Except as expressly provided in this 2011 Amendment to the
1990 Hydropower Contract, the 1990 Hydropower Contract as modified by the
February 14, 2008 Letter Agreement shall remain unchanged and in full force and
effect.

This 2011 Amendment to the 1990 Hydropower Contract shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts and to be performed in such state, without regard to
conflict of laws principles.

This 2011 Amendment to the 1990 Hydropower Contract may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as If the signature thereto and hereto were upon the same
instrument.

Upon approval of the Governor of the State of New York
pursuant to Section 1009 of the Public Authorities Law, and upon execution by
the Chairman of the Authority, this 2011 Amendment to the 1990 Hydropower
Contract shall come into full force and effect, provided however that pending
such gubernatorial approval and execution this 2011 Amendment to the 1990
Hydropower Contract shall take effect upon the expiration of the 2010 Amendment
and continue on a month to month basis.